Sara Lee doubles some board fees

All non-employee directors are paid an annual retainer of $75,000 for serving on the board as well as an annual grant of restricted stock units worth another $75,000. Directors who chair a committee other than the audit committee will now receive an additional retainer of $10,000, up from $5,000, according to a filing with the Securities and Exchange Commission.

The chair of the audit committee will receive an extra retainer of $20,000, up from $10,000. Outside directors who serve as members of the audit committee will get an additional retainer of $7,500, up from $5,000.

Donald Delves, president of the Delves Group, a Chicago-based compensation consulting firm, isn't troubled by the rise in committee member pay.

"The time required to be on a committee has gone up 50%, if not 100% over what it was three years ago," he says. "Part of it is Sarbanes-Oxley, part of it is heightened scrutiny of corporate governance. In my experience, I see board members taking their jobs more seriously."

Paul Hodgson, senior research associate at the Corporate Library, says Sara Lee's committee retainers "are not out of line with increases or levels that exist at other companies." Still, the Maine-based corporate governance watchdog rates Sara Lee's board a "D."

Outside directors of Sara Lee now can choose to receive shares of company common stock and/or restricted stock units instead of their annual cash retainer. Prior to the change, approved at Sara Lee's June 30 board meeting, the directors only could receive common stock in lieu of part or all of their annual cash retainer.

The committee retainers, previously paid in cash, now will be paid half in cash, half in restricted stock units. All restricted stock units will now vest one year after the date they were granted but can't be converted into common stock until six months after the director leaves Sara Lee's board. In the past, all restricted stock units vested in one year but were converted into common stock three years after the grant date.

"I would call that a best practice that they're getting out in front of," Mr. Delves says. "Not converting until after they leave the board creates an incentive for board members to have a long term view of the company."